Local News

Fort Morgan raising water rates 3% in 2018

Average monthly impact of about $2 on residents, city says

By Jenni Grubbs

Times Staff Writer

Posted:
11/28/2017 06:17:45 PM MST

Workers tackle a water main line break Nov. 6 under the 1000 block of Sherman Street just across from Green Acres Elementary School. The costs for paying for emergency repair projects come out of the city's water fund, which gets its revenue from rates paid by city water users. (Jenni Grubbs / Fort Morgan Times)

Starting in January, Fort Morgan residents can expect to pay at least $2 more per month for water, depending on their water usage.

The Fort Morgan City Council recently approved adjusting water rates for 2018 to include the 3 percent increase recommended by the latest rates study.

Water Resources/Utilities Director Brent Nation said that a residential household that currently pays $71.90 for a monthly water bill likely would have a bill next year of $73.90.

The increase was recommended to the council so as to keep the city's water fund revenue on track for the possibility of going out to bond for construction on the Northern Integrated Supply Project (NISP), as well as likely upcoming large capital projects at Fort Morgan Water Treatment Plant and ongoing maintenance of the city's water delivery system, Nation and City Manager Jeff Wells explained.

"When you look at these rates, they're all based on what we need today, what we anticipate we're going to need tomorrow," Wells said. "And we have some pretty good projections on what our capital needs are going to be."

"Obviously the big one that shows up (is when) we start talking about NISP," Nation said of the things that impacted water fund revenue projections and expenses in the most recent water rates study. "Now that we're getting so close to needing to pull the trigger on NISP, (Northern Water has) basically decided that this is going to be a bonded project with basically four major bonds."

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He said the price of constructing NISP has not changed, but some of the projections for how it is expected to be financed for Northern Water by the 15 participants - including Fort Morgan and Morgan County Quality Water District - are changing. That meant the city needed to figure out how to "balance out" those financing expense projections with the water fund projections for revenue.

Nation said the latest water rates study included "a conservative approach" so that the city could "make sure that the fund is safely being funded for these projects" but also keep rates from having to skyrocket in the future.

For now, Nation said the 3 percent water rates increase for 2018 would "keep us moving forward towards where we're projecting that we're going to need over the next 10 to 15 years, depending on how NISP plays out."

"When we look at that 3 percent increase, the good news is we haven't done increases for the last three years," Wells said. "We did that intentionally, knowing that at some point we're going to have to start ramping the rates back up to start bringing in capital, the cashflow we need so that when NISP is constructed, we can pay for it. It is something we absolutely need."

The current rate study did indicate that Fort Morgan's water rates are on the higher end in northeast Colorado, but that had been the case since the Colorado-Big Thompson project began, Nation said.

"We pay for high quality water, and that's what we're getting," he said.

But there also are other things the city's water treatment and water delivery departments will look at doing so as to save money for rate payers, Nation told the council, not getting into specifics right now.

Wells pointed out that the city has been collecting a monthly NISP fee from rate-payers so as to start building up cash toward future bonding for that project, if or when it gets approved.

"Cash is king, that's what we've been told by the rating agencies, and right now that's our goal," he said. "We've been doing that continuously for the last several years and we're looking pretty good, but we have to raise rates to keep up with it. I think we prefer a 3 percent raise now and then than a double-digit raise in the year something gets constructed."

Mayor Ron Shaver said the latest rate study did indicate less of an impact to water rates as NISP were to get built than some previous studies had shown.

But Nation also pointed out that the city is in the process of choosing a new water rates consultant, since the city's long-term consultant from the Farnsworth Group died a year ago and the new consultant from that same firm who completed the most recent study for Fort Morgan recently resigned.

"I think it's time to have a fresh set of eyes looking at this going into these major decisions," Nation said of seeking a new water rates consulting firm. "This fund in particular has a lot with it."

He pointed to the water fund being the city's only fund that currently carries any debt, as well as the likely large expenditures coming up.

The new water rates sheet the council approved includes two new items, Nation told the council, with a commodity rate added for ditch water from the golf course and a flat fee of $25 for getting less than 2,000 gallons of water a single time from a hydrant without a meter.

The former was due to a new type of water serving being available at the golf course, and the latter was to make things less complicated for trucks that seek to fill up a single time during a brief visit to Fort Morgan, Nation explained.

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